I trade based on fundamentals and technicals. It's at the very top of a 2nd Deviation Bollinger Band on 3 year charts. If we're going to base this trade on 3 years of data, how can we say that the major resistance level right there isn't in tact? How do we give a reasonable explanation for a company trying to break bollingers on 3-years chart(which it failed to do so). Oversold on 3-year Chart Fast Stochastic. Over priced on fundamentals. It's worth as much as it was in 2005 yet it's earnings wont be normalized till 2012. Mind boggling? I think so, the short term trades might look bullish but within this month this stock will correct itself to reasonable levels based upon earnings and trade within a channel that matches it's current EPS. I believe that Efficient market theory to a certain extent is correct. I believe that stocks eventually trade in a range that is in line with fundamentals. Trading a range is very easy and predictable in Mega Cap stocks like Wells Fargo. It'll only be a matter of time the market will correct and trade in a range much closer to fundamentals. 2012 is when $35-30 is a feasible channel. My expectations of this channel is $29-26 in all honesty. Reality will hit wall street soon...
Goldman Sachs downgraded today... http://www.bloomberg.com/apps/news?pid=20601110&sid=aHLpVdothyZc May effect other banking stocks, we'll see. I think some times the market needs something to point it's finger at as to why people are selling. If a hedge fund shortsells and crashes a stock and there is no news, people would probably want an investigation. If there is news, they say that's why and join in on the dumping. lol
I can't blame her for cutting her rating. Some of the high quality names e.g. Goldman Sachs is trading way the heck higher than it should in proportion to EPS.
Some major banking stocks down on the FTSE "British banks were weaker awaiting news from their U.S. peers, and with ongoing rights issue concerns lingering. Lloyds Banking Group (LLOY.L) was the top FTSE 100 faller, down 3 percent, while Barclays (BARC.L), Royal Bank of Scotland (RBS.L), and Standard Chartered (STAN.L) lost 0.2 to 2.1 percent." http://www.reuters.com/article/marketsNews/idCALD46858420091013?rpc=44
apparently this breakout was a fakeout. Just like I said it would be. Happy trading ladies and gentlemen.
I think you can sell this one at a better price when Goldman beats later this week. I dont see the upside of rushing to hit it now.
To be honest I think people are dumping because even if every company beat expectations it still doesn't change the fact that their trading at 1 year highs or they are trading at prices equivalent to where they were in 06. Yet they aren't making as much cash as they were in 06. I don't need to look at earnings to know that Wells Fargo can't rake in results equivalent to 05-06 so it shouldn't be trading in a range of $30-35 It's not rocket science ladies and gentlemen
It closed above 30.00 today. JPM is reporting in the morning - we'll see what happens there as things unfold in the morning... We may see dow 10K tomorrow - which again makes no sense. But again, if it makes no sense, embrace it, don't fight it....
And to add to that, it's gone from $8/share to $30/share in 6 months ? If it was compelling at 8 bucks, is it still compelling at 30 ? I think not.